The average mining cost of 1 bitcoin after the halving may double, according to crypto research firm TradeBlock. That’s because miners will have to run twice as much computational power, with a consequent increase in energy expenditure, for purposes of getting the same amount of bitcoins as now. The theme is the subject of the fourth special report that PanoramaCrypto is presenting about bitcoin halving.
According to the firm, the cost is expected to jump from US$ 6,851 to US$ 12,525 after halving. The value is well above the current bitcoin price, at around US$ 5,000 – and US$ 10,000 when the analysis was done. Thus, halving should achieve the full profitability of these agents and many machines should be turned off.
According to Coindesk, this scenario is a lesson in the economics of the bitcoin market cycles, very similar to the commodity markets. Therefore, miners will have to upgrade their machines to mine more efficiently and profitably so that the cost to obtain a bitcoin is lower than the current currency quote.
Analysts at U.S. bank JPMorgan Chase compare bitcoin mining to oil well drilling. If the costs of discovering a barrel of oil are higher than the price of a barrel, it is not worth drilling and many interrupt activity.
TradeBlock estimates are conservative
It is true that some of TradeBlock’s estimates are quite conservative. And they were made before the current market adjustment that led 1 bitcoin to a level of US$ 5,000. They assume that the processing power remains at the level of when the study was done and electricity costs of US$ 0.06 per kWh. It is worth remembering that there are miners paying US$ 0.02 per kWh for electricity.
In addition, the study estimates that 30% of miners will migrate to more efficient machines. However, the trend, according to researchers, is that old machines are turned off and only the most modern and efficient ones are in operation. Therefore, mining companies are likely to be dominated by these more efficient machines.
In moreover, many analysts consider that halving tends to cause a sharp rise in the price of cryptocurrencies in the following 12 to 18 months after the event. Depending on the price that the cryptocurrency will reach, mining with not-so-efficient machines can be made possible.
